OEX.L Regulatory News (OEX)

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Contents

Chairman's Review

Business Review

Permit Schedule

Directors' Report

Remuneration Report - Audited

Lead Auditor's Independence Declaration

Annual Financial Report

Consolidated Statement of Profit or Loss and Other Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Directors' Declaration

Independent Auditor's Report

Additional Shareholder Information

Definitions

Corporate Information

Dear Shareholder,

The recovery of the oil price from a low of around $20 in April 2020 to a current price of over $70 and a bullish demand outlook reflects the ongoing recovery of a global economy dramatically affected by both the COVID-19 pandemic and the changing energy environment driven by the need to attain net-zero carbon emissions. Your company has adopted a strategy focused on gas, the cleanest hydrocarbon, rather than oil and aimed particularly at gas production, gas storage and sequestration of carbon dioxide. All three have commonalities in that they involve sub-surface reservoirs and engineering processes well understood and developed within the hydrocarbon industry and well within the capabilities of the Oilex team, which has been further strengthened by senior management appointments this year.

Our revised strategy, announced in June this year, will focus on making long-awaited progress in our existing Cambay asset in India and further developing an asset base in the UK. Both project areas will focus on gas production.

The joint venture impasse in the Cambay project is finally being resolved through the Company's purchase of GSPC's 55% equity in the project. The transfer of the equity to Oilex only requires the final approval of the Government of India, which is expected within the coming months. This resolution has occurred because of the dedication of the Oilex staff through challenging times.

Following an unsuccessful request to the UK Oil and Gas Authority to extend the initial term of the P2446 exploration licence, the Company has decided to relinquish the licence. The extension was requested due to COVID-19 related delays in completing the initial phase work programme. The remaining technical uncertainties and the Company's new strategy to focus on mature gas field acquisitions and carbon capture and storage (CCS) opportunities were the main drivers behind the Company's decision.

Oilex is now poised to enter a new phase of growth involving the search for and addition of attractive new projects. To that end, the Oilex Board has made significant changes to the management team through the addition of Roland Wessel and Colin Judd who have worked together over many years and overseen the growth and success of a number of projects and companies. This is a very positive event for the Company and the new team is now leading the revised strategy. The initial elements of the execution of the strategy include a restart of field activities in the Cambay PSC, and a focus on mature gas field acquisitions and CCS opportunities in the UK. The Company is committed to achieving carbon-neutral gas production in the UK via the implementation of CCS projects, which will be leveraged by the management team's experience and expertise with respect to gas storage in depleted reservoirs.

At the same time, the historic projects inside of the Company have been largely rationalised with the Indian Bhandut project and the Australian asset base sold, the JPDA dispute resolved, and Indonesian efforts making progress.

Throughout this process, we have enjoyed continued support from our major shareholders who have provided the funding for the GSPC acquisition and maintain a strong interest in the Company's activities.

We seek your continued support in our efforts given the resolution of the major historic challenges and the appointment of a new team to lead the Company through its next development phase. On behalf of the Board, I wish to thank you, our staff, contractors, local communities, shareholders, and stakeholders for your ongoing support.

Mr J Salomon

Executive Chairman

22 September 2021

External Impact on the Petroleum Industry

A number of factors have challenged our industry over the last year as the world deals with the continued effects of the COVID‑19 crisis which has produced a marked shift in working styles and technology used for communications, the move towards net zero carbon and increased activism related to global climate change. These factors, along with low commodity prices for oil and gas in the first half of the financial year, have produced investment caution in our industry while the need for gas as a transition fuel into the future remains very robust. India has been particularly impacted by sequential waves of the COVID-19 pandemic, affecting progress on the Cambay project.

While the cost base of both our Australian and Indian operations continued to see reductions through the reporting period, the Company remained committed to resolving the long-standing impasse of the Cambay PSC and has continued with work on its other projects.

Oilex Strategy

During 2020-2021, Oilex's focus shifted further towards gas, considered by many to be the transition fuel for decades to come. In particular, we have focussed on our core gas project in India and on gas in the UK. Our exposure to oil has been reduced through the sale of our Cooper-Eromanga projects in Australia. Our prime interest continues to lie within proven super-basins which contain world-class source rocks, well-defined fairways, undeveloped discoveries, progressive regulators, open access to data, existing infrastructure, and demonstrable upside potential for junior companies. In addition, the Company is focussing on areas where we believe gas has an important role to play in the energy mix of the surrounding region, and also where carbon sequestration can be added to our project base given the commonalities of gas production, gas storage and carbon storage.

To address this strategy, the Company has recently seen major additions to the executive team which strengthen the Company's operational capabilities in drilling and production projects, along with providing the credentials to access new opportunities, particularly in the UK. The immediate new opportunity focus will be on projects which provide near-term cash flow to the Company.

This revised strategy will see an increased focus on UK activities with an emphasis on carbon-neutral gas production in conjunction with CCS. The Company believes that natural gas will continue to provide an important part of the UK's energy mix for the foreseeable future and will seek to invest in UKCS gas production. Oilex believes it can make a positive contribution to the UK's energy supply and CO2 reduction goals.

Cambay Field, Onshore Gujarat, India

Oilex - 100% (subject to final Government of India approval)

Oilex is the Operator of the Cambay Field and as a result of the recent acquisition of GSPC's 55% participating interest, the Company will hold 100% equity in the project once the Government of India approves the transfer of interest. The buy-out of GSPC has been a focus for some time, facilitated by agreements reached with GSPC in early April 2021 and a capital raising exercise later in the same month, which resulted in an injection of A$4.3 million from sophisticated shareholders into Oilex. The purchase price of GSPC's share of equity was US$2.2 million.

The Cambay PSC has been explored since the late 1950s and saw one of the first exploration successes in India's history. Hydrocarbon production was established from several conventional vertically stacked reservoir sections over the succeeding decades. Oilex entered the project in 2006 and drilled a number of successful early wells establishing production, however, the focus then turned to a potentially large gas resource in the Eocene-aged tight siltstone, which was known to contain and flow gas on test, starting with some of the earliest exploration wells in the region. The potential exists for a TCF-scale gas resource within the licence area and the purchase of GSPC's share of equity now provides the pathway for a pilot project to be undertaken to confirm both flow rate potential and resource size.

The PSC area is located onshore in the state of Gujarat in the heart of one of India's most prolific hydrocarbon provinces. It is ideally located within a major industrial corridor and approximately 20 km from the existing national gas trunk pipeline grid. India's large energy market is currently dependent on gas imports. The Cambay PSC is well-positioned to displace imported gas with indigenous gas supplies.

Oilex's plan centres around recommencement of production from 2 wells (C-73 and C-77H) and the further evaluation of the Cambay EP-IV tight gas accumulation. In this respect, both workovers/recompletion of existing wells and the drilling of new wells are being considered. A significant body of work has been completed to understand the reasons for under-delivery in past drilling programs and to provide a reliable approach to achieve commercial gas flow rates. Field execution is expected to be in the first half of 2022. This ties in with a government approved Field Development Plan (FDP) which provides a staged approach, initially focussing on the drilling of a small number of new wells to gather key information on reservoir performance. The plan is based on the results from a series of technical studies with the application of the most appropriate drilling, stimulation and completion technologies available.

Upon success, the upcoming programme will provide the basis for a larger drilling programme to follow, aimed at aggregating sufficient production volumes to connect to the trunk pipelines. Such a success will link Oilex's gas production to the high-pressure gas network with higher (LNG replacement) gas prices and greater offtake stability.

Oilex also remains in discussion with a number of companies who have expressed interest in the Cambay PSC and its potential, with the possibility of a farmout exercise to reduce the Company's exposure to financing and project risk.

Oilex expects to obtain a new environmental clearance from the Ministry of Environment and Forest and Cabinet Committee to supersede the clearances already obtained under the previous regulatory requirements, which will allow the small scale gas production to re-commence from the existing C-73 and C-77H wells. While production rates are small, the proceeds pay for field costs.

Resource volumes for the Eocene are unchanged since June 2016 and are summarised in the following table which shows 100% working interest. The development plan submitted as part of the application for extension of the PSC term addresses a sub-set of these resources in a staged approach.

During the financial year, the Joint Venture received US$0.364 million gross from GSPC against outstanding cash calls for Cambay. An additional payment of US$0.543 million has been paid by GSPC to Oilex on 4 September 2021 as settlement for all remaining unpaid cash calls.

Bhandut Field, Onshore Gujarat, India

During the year, Oilex N.L. Holdings (India) Limited divested its 40% holding in the Bhandut Field Production Sharing Contract (PSC) in the Cambay Basin onshore Gujarat, to Kiri and Company Logistics (Kiri) for US$0.29 million in cash.

During the financial year, the Joint Venture received US$0.052 million gross from GSPC against outstanding cash calls for Bhandut. In addition, US$0.028 million was paid by Kiri to Oilex for GSPC's share of outstanding cash calls.

JPDA 06-103, Timor Sea

(Oilex - 10%, Operator)

In August 2020, on behalf of its Joint Venture Participants, Oilex announced a Deed of Settlement and Release (Deed) with the Autoridade Nacional Do Petroleo E Minerais (ANPM). Under the terms of the Deed, Oilex has committed to a settlement of US$800,000 payable up to the financial year 2024. A total of US$211,843 has been paid to date. Under an unsecured loan facility agreement that the Company has entered into with two of its joint venture partners, the balance of US$588,157 is due for settlement prior to 17 August 2023.

West Kampar PSC, Central Sumatra, Indonesia

The Company continued to work on its objective to regain a participating interest in the West Kampar PSC in Indonesia, which is expected to lead, subject to financing, to recommencing production from the Pendalian Oilfield.

The West Kampar Block is located in central Sumatra adjacent to the most prolific oil producing basin in Indonesia and covers some 900 square kilometres. It contains the Pendalian Oilfield which has remaining production potential.

Following various meetings and correspondence with the Government of Indonesia and with the support of our local Indonesian partner, the government has advised that our Proposed Direct Bid, through the Joint Study of the West Kampar Region, is declared administratively complete and has recorded it as a proposal for a Direct Offer through a Joint Study as stipulated in ESDM Regulation No. 35 of 2008. The Company continues to engage with the regulator with a view to restoring its interest in West Kampar. Oilex will share in any award of the PSC on a 50-50 joint basis with its local Indonesian partner, PT Ephindo. Upon success, the longer-term position of the asset will be determined in line with the Company's broader strategic objectives.

Cooper Eromanga Basins

In September 2020, Oilex completed the sale of its Cooper Eromanga Basin asset package to Armour Energy. Under the agreement, Armour acquired 100% of the issued capital of CoEra Limited, a wholly-owned subsidiary of Oilex holding the Cooper-Eromanga assets, in exchange for Armour issuing 22,050,000 fully paid ordinary shares to Oilex as the purchase price. Subsequently, in January 2021, 5,000,000 Armour shares were sold to raise maintenance capital for the Company. A further 19,153 Armour shares were sold in February 2021. The remaining 17,030,847 shares are being held by the Company.

East Irish Sea (P2446 Licence)

Following an unsuccessful request to the UK Oil and Gas Authority to extend the initial term of the P2446 exploration licence, the Company plans to relinquish the licence. The extension was requested due to COVID-19 related delays in completing the initial phase work programme. The remaining technical uncertainties and the Company's new strategy to focus on mature gas field acquisitions and CCS opportunities were the main drivers behind the Company's decision.

Financial

Treasury policy

The funding requirements of the Group are reviewed on a regular basis by the Group's Chief Financial Officer and reported to the Board to ensure the Group can meet its financial obligations as and when they fall due. Internal cash flow models are used to review and test investment decisions. Until sufficient operating cash flows are generated from its operations, the Group remains reliant on equity or debt funding, as well as assets divestiture or farmouts to fund its expenditure commitments.

Formal control over the Group's activities is maintained through a budget and cash flow monitoring process with annual budgets considered in detail and monitored monthly by the Board and forming the basis of the Company's financial management strategy.

Cash flows are tested under various scenarios to ensure that expenditure commitments can be met under all reasonably likely scenarios. Expenditures are also carefully monitored against the budget. The Company continues to actively develop funding options in order to meet its expenditure commitments and its planned future discretionary expenditure. During the year several capital raisings were completed to provide for working capital for the Company.

A number of debt and equity capital raisings were undertaken during the year to provide working capital for the Company's activities:

September 2020 quarter

· Placement of 312,500,000 ordinary shares at an issue price of £0.0008 per share (A$0.00144 per share) for gross proceeds of £0.25 million (A$0.5 million).

· Repayment in full of the Series B loan funding facility.

December 2020 quarter

· Amendment of Series C loan funding facility repayment date extended initially from 31 October 2020 to 31 December 2020 and then to 31 March 2021.

March 2021 quarter

· Amendment of Series D loan funding facility to 30 June 2021.

· Repayment in full of the Series C loan funding facility.

· Placement of 250,000,000 ordinary shares at an issue price of £0.0014 per share (A$0.00252 per share) for gross proceeds of £0.35 million (A$0.63 million).

June 2021 quarter

· Repayment in full of the Series D (19/04/2021) loan funding facility.

· Placement of 1,008,403,361 ordinary shares at an issue price of £0.00238 per share (A$0.00425 per share) for gross proceeds of £2.4 million (A$4.3 million) in two tranches. The funds raised are to be applied to the acquisition cost of GSPC's PI, and the development of the Company's plans to undertake a drilling and testing appraisal program and the Company's working capital base.

Corporate

The Company has dual listing on the ASX and the Alternative Investment Market (AIM) of the London Stock Exchange with approximately 81.20% of the Company's shares held on the Company's UK register.

During the year 204,545,455 loan options were exercised at an exercise price of £0.11 pence per option, and 29,802,631 broker options were exercised at a weighted-average exercise price of £0.00135 per option.

As at 30 June 2021 the Company had:

· Available cash resources of $4,310,767,

· Nil borrowings

· Issued capital of 5,685,971,571 fully paid ordinary shares and unlisted options of 603,403,361.

Executive and Board Changes

During the financial year, the following board changes were made:

· The appointment of Mr Roland Wessel as Chief Executive Officer and Director, effective 16 June 2021. Roland's appointment was a significant addition to the Oilex senior management team. Roland continues to play an instrumental role in leading the Company through a new and ambitious growth phase.

· Concurrent to Roland Wessel's appointment, Joe Salomon, who was the Company's Managing Director and Interim Chairman, assumed the position of Executive Chairman.

Risk Management

The full Board undertakes the function of the Audit and Risk Committee and is responsible for the Group's internal financial control system and the Company's risk management framework. Management of business risk, particularly exploration, development and operational risk is essential for success in the oil and gas business. The Group manages risk through a formal risk identification and risk management system.

Health, Safety, Security and Environment

Oilex is committed to protecting the health and safety of everybody who plays a part in our operations or lives in the communities where we operate. Wherever we operate, we will conduct our business with respect and care for both the local and global, natural and social environment and systematically manage risks to drive sustainable business growth. We will strive to eliminate all injuries, occupational illness, unsafe practices and incidents of environmental harm from our activities. The safety and health of our workforce and our environmental stewardship are just as important to our success as operational and financial performance and the reputation of the Company.

Oilex respects the diversity of cultures and customs that it encounters and endeavours to incorporate business practices that accommodate such diversity and that have a beneficial impact through our working involvement with local communities. We strive to make our facilities safer and better places in which to work and our attention to detail and focus on safety, environmental, health and security issues will help to ensure high standards of performance. We are committed to a process of continuous improvement in all we do and to the adoption of international industry standards and codes wherever practicable. Through implementation of these principles, Oilex seeks to earn the public's trust and to be recognised as a responsible corporate citizen.

Qualified Petroleum Reserves and Resources Evaluator Statement

Pursuant to the requirements of Chapter 5 of the ASX Listing Rules, the information in this report relating to petroleum reserves and resources is based on and fairly represents information and supporting documentation prepared by or under the supervision of Mr Jonathan Salomon, Executive Chairman employed by Oilex Ltd. Mr Salomon has over 35 years' experience in petroleum geology and is a member of the American Association of Petroleum Geologists, and the Society of Petroleum Engineers. Mr Salomon meets the requirements of a qualified petroleum reserve and resource evaluator under Chapter 5 of the ASX Listing Rules and consents to the inclusion of this information in this report in the form and context in which it appears. Mr Salomon also meets the requirements of a qualified person under the AIM Note for Mining, Oil and Gas Companies and consents to the inclusion of this information in this report in the form and context in which it appears.

(1) Oilex has signed a binding agreement to acquire GSPC's 55% share of equity and the purchase price has been paid under a bank guarantee. Following GoI approval Oilex will hold 100% equity.

(2) Bhandut PSC has been sold to Kiri and Company Logistics Private Limited.

(3) PSC terminated 15 July 2015.

(4) The P2446 licence was relinquished in September 2021.

For the year ended 30 June 2021

The directors of Oilex Ltd present their report (including the Remuneration Report) together with the consolidated financial statements of the Group comprising of Oilex Ltd (the Company) and its subsidiaries for the financial year ended 30 June 2021 and the auditors' report thereon.

DIRECTORS

The directors of Oilex Ltd in office at any time during or since the end of the financial year are:

Mr Roland Wessel

(Chief Executive Officer and Director, appointed 16 June 2021)

Mr Wessel is a geologist with 45 years' experience in all of the world's major oil and gas regions. Further details of Mr Wessel's qualifications and experience can be found in the Executive Management section of the Directors' Report.

During the last three financial years and up to the date of this report, Mr Wessel has not been a director of any other ASX listed companies.

Mr Jonathan Salomon (B App Sc (Geology), GAICD)

(Executive Chairman, appointed 16 June 2021)(Interim Chairman and Managing Director until 15 June 2021)

Mr Salomon was appointed as a Non-Executive Director in November 2015, Managing Director on 18 March 2016, and Interim Chairman on 5 May 2020 following the resignation of Mr Lingo. Mr Salomon continued as Managing Director and Interim Chairman until he was appointed as Executive Chairman on 16 June 2021. Mr Salomon has over 35 years of experience working for upstream energy companies. Further details of Mr Salomon's qualifications and experience can be found in the Executive Management section of the Directors' Report.

During the last three financial years, Mr Salomon has not been a director of any other ASX listed companies.

Mr Mark Bolton (B Business)

(Non-Executive Director, appointed 1 July 2021)

(Executive Director and Chief Financial Officer until 1 July 2021, Company Secretary until 25 August 2021)

Mr Bolton was appointed Chief Financial Officer and Company Secretary on 3 June 2016, and as Executive Director on 26 March 2020. Mr Bolton continued as Executive Director and Chief Financial Officer until 1 July 2021, when he was appointed as Non-Executive Director. Mr Bolton resigned as Company Secretary on 25 August 2021. Mr Bolton has significant experience in the development and financing of new resources projects, particularly in emerging economies. Further details of Mr Bolton's qualifications and experience can be found in the Executive Management section of the Directors' Report.

During the last three financial years and up to the date of this report, Mr Bolton has not been a director of any other ASX listed company.

Mr Paul Haywood

(Non-Executive Director)

Mr Haywood was appointed as a Non-Executive Director in May 2017. Mr Haywood has over 17 years of international experience in delivering value for his investment network through a blended skill set of corporate and operational experience, including more than six years in the Middle East, building early stage and growth projects. More recently, Mr Haywood has held senior management positions with UK and Australian public companies in the natural resource and energy sectors including oil and gas exploration and development in UK, EU and Central Asia. Mr Haywood's expertise stretches across UK and Australian public markets, with a cross-functional skill set encompassing research, strategy, implementation, capital and transactional management. Mr Haywood is currently Chief Executive Officer of Block Energy Plc.

During the last three financial years and up to the date of this report, Mr Haywood has not been a director of any other ASX listed companies.

Mr Peter Schwarz (B Sc (Geology), M Sc (Petroleum Geology))

(Non-Executive Director)

Mr Schwarz was appointed as a Non-Executive Director in September 2019. A former director of BG Exploration and Production Limited and CEO of independent exploration company Virgo Energy Ltd, Mr Schwarz is an AAPG Certified Petroleum Geologist and business development professional with over 40 years' experience in the oil and gas industry. Mr Schwarz has previously held various senior management roles with Amerada Hess, BG, and Marubeni and is currently a director of Finite Energy Limited, an oil and gas consultancy business he founded over 15 years ago, specialising in strategy and business development advice in the UK and Europe.

During the last three financial years and up to the date of this report, Mr Schwarz has not been a director of any other ASX listed companies.

COMPANY SECRETARY

The Executive Director, Mr Mark Bolton (B Business) was appointed Company Secretary on 3 June 2016. He resigned as Company Secretary on 25 August 2021. Mrs Suzie Foreman (FGIA, CA, BComm) was appointed as Company Secretary in Mr Bolton's place on 25 August 2021.

Mrs Foreman is a Chartered Accountant and Governance Institute Fellow member, specialising in the provision of corporate governance, financial reporting and company secretarial advice to entities for over 20 years. Mrs Foreman has held senior management roles and has demonstrated experience across a range of businesses from start-up enterprises to large corporates, Mrs Foreman has acted in the capacity of Non-Executive Director, Chief Financial Officer and Company Secretary and is currently the Company Secretary of ASX-listed entity Spectur Limited.

CORPORATE GOVERNANCE STATEMENT

The Corporate Governance Statement, which reports on Oilex's key governance principles and practices is available on the Oilex website.

In establishing its corporate governance framework, the Company has referred to the recommendations set out in the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations 4th edition.

The Company has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company's corporate governance practices follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. In compliance with the "if not, why not" reporting regime, where, after due consideration, the Company's corporate governance practices do not follow a recommendation, the Board has explained its reasons for not following the recommendation and disclosed what, if any, alternative practices the Company has adopted instead of those in the recommendation.

The Corporate Governance Statement provides detailed information on the Board and committee structure, diversity and risk management.

DIRECTORS' MEETINGS

Directors in office and directors' attendance at meetings during the 2020/21 financial year are as follows:

(1) Following the changes to the Board at the Annual General Meeting on 25 November 2015, the Board resolved that the full Board would perform the role of the Audit and Risk Committee and the Remuneration and Nomination Committee.

(2) Held indicates the number of meetings available for attendance by the director during the tenure of each director.

(3) Appointed Chief Executive Officer and Director on 16 June 2021.

(4) Managing Director and Interim Chairman until 15 June 2021, appointed Executive Chairman 16 June 2021

(5) Executive Director until 30 June 2021, appointed Non-Executive Director 1 July 2021.

EXECUTIVE MANAGEMENT

Mr Roland Wessel

(Chief Executive Officer and Director, appointed 16 June 2021)

Mr Wessel is a geologist with 45 years' experience in all of the world's major oil and gas regions. Mr Wessel founded and built Star Energy, the UK onshore operator of 25 oil and gas fields, through to its listing on AIM in 2004 and its sale to Petronas in 2008. During its evolution, Star Energy grew rapidly through acquisitions and diversification, culminating in it becoming a major gas storage developer and operator. During his career, Mr Wessel has founded and managed a drilling services company and has developed and patented several key oilfield technologies. He has extensive experience in both project and corporate management.

Mr Jonathan Salomon (B App Sc (Geology), GAICD)

(Executive Chairman, appointed 16 June 2021)(Interim Chairman and Managing Director until 15 June 2021)

Mr Salomon was appointed as a Non-Executive Director in November 2015, Managing Director on 18 March 2016, and Interim Chairman on 5 May 2020 following the resignation of Mr Lingo. Mr Salomon continued as Managing Director and Interim Chairman until he was appointed as Executive Chairman on 16 June 2021. Mr Salomon has a Bachelor Degree in Applied Science and is a member of the American Association of Petroleum Geologists and the Society of Petroleum Engineers, and has over 35 years of experience working for upstream energy companies. Mr Salomon has worked for a number of oil and gas companies in various senior positions including General Manager Exploration and New Ventures at Murphy Oil Corporation and Global Head of Geoscience at RISC PL, in addition to a number of Executive Director roles including Strategic Energy Resources, Norwest Energy and Nido Petroleum. At several times in his career, Mr Salomon has acted as an independent consultant for various oil and gas companies, including New Standard Energy and Pacrim Energy. Mr Salomon first worked on Indian projects in 1994 while at Ampolex and since that time has maintained a connection with the Indian industry, at various times bidding in India's exploration and field development rounds and working with Indian companies as joint venture partners, both in India and internationally.

Mr Colin Judd

(Chief Financial Officer, appointed 1 July 2021)

Mr Judd qualified as a chartered accountant with Price Waterhouse in 1979, where he fulfilled various professional accounting positions in the UK, Europe and the Far East. Mr Judd joined Christian Salvesen plc in 1987, undertaking senior financial management roles culminating in the position of European Financial Controller. In 1994, Mr Judd moved to Aberdeen where he undertook Chief Financial Officer roles for two private-equity-backed oil service businesses. In 1999, Mr Judd joined Star Energy Limited as a founder member and Chief Financial Officer and was instrumental in the company's successful listing on AIM in 2004, various subsequent share placings and the company's ultimate sale to Petronas. Mr Judd cofounded Trans European Oil & Gas Limited, a company backed by KKR, with the strategy to develop a pan-European oil and gas business.

Mr Mark Bolton (B Business)

(Non-Executive Director, appointed 1 July 2021)

(Executive Director and Chief Financial Officer until 1 July 2021, Company Secretary until 25 August 2021)

Mr Bolton was appointed Chief Financial Officer and Company Secretary on 3 June 2016, and as Executive Director on 26 March 2020. Mr Bolton continued as Executive Director and Chief Financial Officer until 1 July 2021, when he was appointed as Non-Executive Director. Mr Bolton resigned as Company Secretary on 25 August 2021. He has significant experience in the resource sector in Australia, having worked as Chief Financial Officer and Company Secretary for a number of resource companies since 2003. Prior to this, Mr Bolton worked with Ernst & Young as an Executive Director in Corporate Finance. Mr Bolton has experience in the areas of commercial management and the financing of resource projects internationally. He also has extensive experience in capital and equity markets in a number of jurisdictions including ASX, AIM and the TSX.

Mr Ashish Khare (Bachelor of Engineering (BE in Chemical Engineering, including petroleum management))

(Head of India Assets)

Mr Khare was appointed Head of India Assets on 8 November 2016 and is based in Gandhinagar India. Mr Khare has over 20 years of experience in the petroleum industry. Mr Khare's area of expertise include upstream oil and gas, as well as midstream and downstream project implementation and operations management. Mr Khare originally worked for Oilex as GM Operations & Business Development, and has experience working for various Indian companies including Cairn India Ltd and Reliance Petroleum.

PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the financial year included:

· exploration for oil and gas;

· appraisal and development of oil and gas prospects; and

· production and sale of oil and gas.

There were no significant changes in the nature of the activities during the year.

OPERATING RESULTS

The loss after income tax of the consolidated entity for the year ended 30 June 2021, from continuing operations, amounted to $1,710,917 (2020: $5,652,540). This loss was reduced to $614,345 after taking into account the profit after income tax from discontinued operations of $1,096,572 (2020: loss was increased to $5,841,096 after taking into account the loss after income tax from discontinued operations of $188,556).

The results from discontinued operations related to the Group's operating results from its interests in the Bhandut PSC joint venture and the CoEra Limited group for the prior and current financial periods up to the date of sale of those assets. The profit after income tax from discontinued operations includes a gain on sale of the Bhandut Joint Venture interest after tax of $788,236 (2020: $nil) and a gain on sale of CoEra Limited group of subsidiaries after tax of $344,167 (2020: $nil).

Following the voluntary shut-in of the Cambay Field in Q1 2019 resulting in the cessation of production, no revenue was recognised during the current and previous financial years. Other income during the year included COVID-19 related government assistance arrangements of $130,400 (2020: $98,000) and a gain on sale of equity securities (related to Armour shares which were sold during the year) of $100,402 (2020: $nil).

In the absence of a repayment schedule for outstanding cash calls from Gujarat State Petroleum Corporation (GSPC), the Company has continued to provide in full the amounts owing from its Joint Venture partner as well as amounts owing from the Cambay and Bhandut Joint Ventures, with the exception of a US$543,114 (A$722,267) Cambay cash call payment which was received on 4 September 2021, subsequent to the reporting date.

In addition to the above cash call payment received, the reduction in joint venture cash call and recharges since 30 June 2021 has resulted in a reversal in the provision for doubtful debts related to Cambay cash calls and recharges of $622,216 and a reversal in the provision for doubtful debts related to other receivables of $25,719. These reversals have been partially offset by a provision for doubtful debts expense of $121,551 required for the Group's share of JPDA JV cash call receivables. As a result, results from continuing operations include a credit to the provision for doubtful debts expense of $526,385 (2020: $23,336).

Exploration costs related to continuing operations have decreased to $513,122 (2020: $994,779) reflecting the Group's efforts to contain costs and due to the general impact of the ongoing COVID-19 pandemic, especially in India. In addition to these exploration costs, the Group has also written off $309,703 (2020: $nil), due to the Company's plans to relinquish its P2446 exploration licence, as announced on 17 September 2021 following an unsuccessful request to the UK Oil and Gas Authority (OGA) to extend the initial term of the licence. The $309,703 which was written off consists of $260,331 which was spent on the acquisition of the licence and $49,372 capitalised expenditure which was incurred post the acquisition of the licence.

Care and maintenance costs related to continuing operations decreased to $140,259 (2020: $1,061,121) also reflecting the Group's efforts to contain costs. The care and maintenance costs from continuing operations included a write-down of inventory of $29,922 (2020: $859,440).

No further impairment charge has been applied to the Cambay Field development assets during the current financial year (2020: $1,348,458)

The prior year results from continuing operations included a reduction in variable operating expenses as part of Group's effort to reduce costs. In the current year, efforts to contain costs have continued with further reductions in administration employee expenses $503,643 (2020: $718,210). Total administration expenses from continuing operations of $1,075,711 (2020: $1,967,442) include the above-mentioned reduction in employee expenses and other administration expenses.

Other expenses have decreased to $24,888 (2020: $335,393), as other expenses during the prior financial year included an increase of the termination penalty provision related to the JPDA 06-103 Production Sharing Contract by $297,885.

The impact of the ongoing COVID-19 pandemic up to 30 June 2021 has been financially negative for the consolidated entity. This is largely due to its general impact in India where significant delays have been experienced with the completion of the sale of GSPC's 55% interest in the Cambay Production Sharing Contract (PSC). As a result, Indian operations have continued to be maintained on a 'care and maintenance' basis for a longer period than originally anticipated.

Cash and cash equivalents held by the Group as at 30 June 2021 has increased to $4,310,767 (2020: $173,816).

FINANCIAL POSITION

The net assets of the consolidated entity totalled $8,982,903 as at 30 June 2021 (2020: $3,719,824).

DIVIDENDS

No dividend was paid or declared during the year and the directors do not recommend the payment of a dividend.

REVIEW OF OPERATIONS

A review of the operations of the Group during the financial year and the results of those operations are set out in the Review of Operations on pages 3 to 7 of this report.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

The Review of Operations details those changes that have had a significant effect on the Group.

Other than those matters, there have been no other significant changes in the state of affairs of the Group that occurred during the financial year.

LIKELY DEVELOPMENTS

Additional comments on expected results on operations of the Group are included in the Review of Operations on pages 3 to 7.

Further disclosure as to likely developments in the operations of the Group and expected results of those operations have not been included in this report as, in the opinion of the Board, these would be speculative and as such, disclosure would not be in the best interests of the Group.

ENVIRONMENTAL ISSUES

The Group's oil and gas exploration and production activities are subject to environmental regulation under the legislation of the respective states and countries in which they operate. The majority of the Group's activities involve low level disturbance associated with its drilling programmes and production from existing wells. The Board actively monitors compliance with these regulations and as at the date of this report is not aware of any material breaches in respect of these regulations.

SIGNIFICANT EVENTS AFTER BALANCE DATE

The impact of the COVID-19 pandemic is ongoing and while it has been financially negative for the consolidated entity up to 30 June 2021, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian and Indian Governments and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

Following the Company's announcement on 11 June 2021 on the execution of the SPA and the Acquisition of Cambay, the Company secured a bank guarantee on 31 July 2021 for the US$2.2 million consideration payable for the Acquisition. The ratification of the SPA and Acquisition by the Government of India is expected to occur in the coming months and is the last outstanding condition to completing the Acquisition. Refer to Note 12 for further details of the Acquisition.

On 12 August 2021, the Company also announced the issue of 2,458,785 shares in lieu of non-executive director remuneration for the period from 1 May 2021 through to 31 July 2021 at an issue price of $0.004 per ordinary share.

On 4 September 2021, the Company received cash proceeds of US$543,114 with regards to outstanding GSPC cash calls for the Cambay PSC.

On 17 September 2021, the Company announced its plans to relinquish the P2446 licence, following an unsuccessful request to the UK Oil and Gas Authority (OGA) to extend the initial term of the licence. This has been recognised in the 30 June 2021 results with a write-off of $309,703 in respect of licence acquisition costs ($260,331) and post-acquisition capitalised expenditure ($49,372).

There were no other significant subsequent events occurring after the year-end.

FINANCIAL POSITION

Capital Structure and Treasury Policy

As at 30 June 2021 the Group had unsecured loans at face value $nil (2020: $804,959). Refer note 17 of the Consolidated Financial Statements for details of the carrying amount, terms and conditions, repayment schedule, and options attached to the loans.

Details of transactions involving ordinary shares during the financial year are as follows:

In accordance with the ASX Waiver granted 2 November 2020 the Company advises that the number of remuneration shares that were issued to non-executive directors totalled 26,447,267. This represents 0.47% of the Company's issued capital as at 30 June 2021.

As at the date of this report the Company had a total issued capital of 5,688,430,356 ordinary shares and 603,403,361 unlisted options exercisable at weighted average price of £0.00476 (A$0.009) per share.

DIRECTORS' INTERESTS

The relevant interest of each director in shares and unlisted options issued by the Company, as notified by the directors to the ASX in accordance with Section 205G (1) of the Corporations Act 2001, at the date of this report is as follows:

SHARE OPTIONS

Unissued shares under option

All options were granted in the current and previous financial years.

At the date of this report, unissued ordinary shares of the Company under option (with an exercise price) are:

These options do not entitle the holder to participate in any share issue of the Company or any other body corporate.

Unissued shares under option that expired during the year

During the financial year, the following unlisted options expired or were cancelled upon cessation of employment:

Shares issued on exercise of unlisted options

During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of unlisted options as follows (there were no amounts unpaid on the shares issued):

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Group paid a premium in respect of insurance cover for the directors and officers of the Group. The Group has not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors' liability and legal expense insurance contracts, as such disclosure is prohibited under the terms of the insurance contract.

PROCEEDINGS ON BEHALF OF THE COMPANY

No proceedings have been brought on behalf of the Company, nor has any application been made in respect of the Company under Section 237 of the Corporations Act 2001.

NON-AUDIT SERVICES

The Company may decide to employ the Auditor on assignments additional to their statutory audit duties where the Auditor's expertise and experience with the Group is important.

The Board has considered the non-audit services provided during the year and is satisfied that the provision of the non-audit services is compatible with, and did not compromise, the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

· all non-audit services were subject to the corporate governance procedures adopted by the Group and these have been reviewed by the Board to ensure they do not impact the impartiality and objectivity of the auditor; and

· the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards.

Refer note 28 of the Consolidated Financial Statements for details of the amounts paid to the auditors of the Group, PKF Perth and their network firms for audit and non-audit services provided during the year.

rounding of Amounts

The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest dollar, unless otherwise stated.

LEAD AUDITOR'S INDEPENDENCE DECLARATION

The Lead Auditor's Independence Declaration for the year ended 30 June 2021 has been received and can be found on page 25.

REMUNERATION REPORT - AUDITED

The Board has performed the function of the Nomination and Remuneration Committee since June 2016 when the Board considered that, given the size and composition of the existing Board, that there are no efficiencies to be gained by having a separate committee. The Board has adopted a Nomination and Remuneration Committee Charter, which describes the role, composition, functions and responsibilities of the committee. The Nomination and Remuneration Committee is responsible for the review and recommendation to the Board, of the Company's Remuneration Policy, senior executives' remuneration and incentives, the remuneration framework for directors, superannuation arrangements, incentive plans and remuneration reporting.

1. PRINCIPLES OF COMPENSATION

Remuneration is referred to as compensation throughout this report. The Remuneration Report explains the remuneration arrangements for directors and senior executives of Oilex Ltd who have authority and responsibility for planning, directing and controlling the activities of the Group (key management personnel).

The compensation structures explained below are designed to attract, retain and motivate suitably qualified candidates, reward the achievement of strategic objectives and achieve the broader outcome of the creation of value for shareholders. The compensation structures take into account:

· the capability and experience of the key management personnel;

· the ability of key management personnel to control the performance of the relevant segments;

· the current downturn and uncertainty within the resources industry;

· the Company's performance including:

o the Group's earnings; and

o the growth in share price and delivering constant returns on shareholder wealth;

· exploration success; and

· development of projects.

Compensation packages include a mix of fixed compensation and long-term performance-based incentives. In specific circumstances, the Group may also provide short-term cash incentives based upon the achievement of Company performance hurdles or in recognition of specific achievements.

1.1 Fixed Compensation

Fixed compensation consists of base compensation and employer contributions to superannuation funds. Compensation levels are reviewed annually through a process that considers individual, sector and overall performance of the Group. In addition, reviews of available data on oil and gas industry companies provide comparison figures to ensure the directors' and senior executives' compensation is competitive in the market.

Reductions in remunerations were introduced in 2016 and 2017 for the Executive and Non-Executive Directors in office at the time, and all staff have remained in place, with further reductions for some staff which commenced in April/May 2020.

Compensation for senior executives is separately reviewed at the time of promotion or initial appointment.

1.2 Performance Linked Compensation

Performance linked compensation includes both short-term and long-term incentives designed to reward key management personnel for growth in shareholder wealth. The short-term incentive (STI) is an "at risk" bonus provided in the form of cash or shares, while the long-term incentive plan (LTI) is used to reward performance by granting options over ordinary shares of the Company.

Short-term incentive bonus

The Group does not utilise short-term incentives on an annual or regular basis, as these are not considered part of the standard compensation package for key management personnel.

In certain circumstances, the Board may, for reasons of retention, motivation or recognition, consider the use of short-term incentives.

Short-term incentives, if granted, are at the discretion of the Board having regard to the business plans set before the commencement of the financial year as well as the achievement of performance targets as determined by the Board. These targets include a combination of key strategic, financial and personal performance measures which may have a major influence over company performance in the short term.

There were no short-term incentives, performance bonuses or shares granted to senior executives or staff during the year ended 30 June 2021.

REMUNERATION REPORT - AUDITED (CONTINUEd)

1. PRINCIPLES OF COMPENSATION (Continued)

1.2 Performance Linked Compensation (Continued)

Long-term incentive bonus

Shareholders approved the 2017 Employee Incentive Plan (the Plan) at the AGM held 29 November 2017, which has yet to be implemented.

The Plan is a long-term incentive plan designed to allow the Group to attract and retain talented employees. The Plan aims to closely align the interests of directors, senior executives, employees and eligible contractors with those of shareholders and create a link between increasing shareholder value and employee reward.

The Plan permits the Board to grant shares and rights to acquire shares in the Company. Rights granted under the Plan may be in the form of options with a market-based exercise price, or performance rights, or a combination of these depending upon the Company's objectives in making the grant.

Vesting conditions may include one or more objectives and/or time-based milestones set at the discretion of the Board.

Whilst the Company moved certain assets to development in previous financial years, these were impaired during the previous financial year, and the Company does not generate profits or net operating cash inflows and as such does not pay any dividends, and consequently remuneration packages are not linked to profit performance. It is the performance of the overall exploration and appraisal programme and ultimately the share price that largely determines Oilex's performance. The Board therefore considered that fixed compensation combined with short-term and long-term incentive components is the best remuneration structure for achieving the Company's objectives to the benefit of shareholders. The table below sets out the closing share price at the end of the current and four previous financial years.

The remuneration of directors may consist of a cash component as well as an equity component; and is designed to retain directors of a high calibre, whilst rewarding them for their ongoing commitment and contribution to the Company on a cost-effective basis. The issue of shares, rights or options to directors, subject to shareholder approval, is judged by the Company, to further align the directors' interests with that of shareholders, whilst maintaining the cash position of the Company. The Board does not consider that there are any significant opportunity costs to the Company or benefits foregone by the Company in issuing shares, rights or options to directors.

The Company did not issue any long-term incentives to directors, senior executives or staff during the year ended 30 June 2021.

1.3 Non-Executive Directors

Total compensation for all Non-Executive Directors is based on a comparison with external data with reference to fees paid to Non-Executive Directors of comparable companies. Directors' fees cover all main Board activities and membership of committees, if applicable.

The Board resolved to further reduce the remuneration of Non-Executive Directors by 10% effective from 1 October 2016 and these reductions remained in place during the year ended 30 June 2021.

The annual fee for Mr Bolton was set at $55,381 plus statutory superannuation per annum effective from 1 July 2021 when he resigned as Executive Director and was appointed as Non-Executive Director.

The annual fee for Mr Haywood, the Company's UK based Non-Executive Director was set at £30,000 per annum on commencement in May 2017 and remains unchanged.

The annual fee for Mr Schwarz, the Company's UK based Non-Executive Director was set at £30,000 per annum on commencement in September 2019 and remains unchanged.

At the Annual General Meeting held 27 November 2019 shareholders approved the issue of remuneration shares, whereby two Non‑Executive Directors agreed to receive part of their Directors fees paid through the issue of shares in lieu of cash payments, for the period of 1 November 2019 through to 31 October 2020, in order to conserve the cash reserves of the Company. Similar shareholder approval was also received at the Annual General Meeting held on 16 December 2020 for the period 1 November 2020 through to 31 October 2021. Shareholder approval was separately obtained at the General Meeting held on 8 June 2021 for the remuneration shares issued for the period from 1 May 2019 through to 31 October 2020.

REMUNERATION REPORT - AUDITED (CONTINUEd)

1. PRINCIPLES OF COMPENSATION (Continued)

1.3 Non-Executive Directors (Continued)

The aggregate maximum fixed annual amount of remuneration available for Non-Executive Directors of $500,000 per annum was approved by Shareholders on 9 November 2011.

In addition to the fixed component, the Company can remunerate any director called upon to perform extra services or undertake any work for the Company beyond their general duties. This remuneration may either be in addition to, or in substitution for, the director's share of remuneration approved by Shareholders.

1.4 Clawback Policy

The Board has adopted the following Clawback Policy applicable from August 2015.

In relation to circumstances where an employee acts fraudulently or dishonestly, or wilfully breaches his or her duties to the Company or any of its subsidiaries, the Board has adopted a clawback policy in relation to any cash performance bonuses (including deferred share awards) or LTIs. The Board reserves the right to take action to reduce, recoup or otherwise adjust an employee's performance based remuneration in circumstances where in the opinion of the Board, an employee has acted fraudulently or dishonestly or wilfully breached his or her duties to the Company or any of its subsidiaries. The Board may:

· deem any bonus payable, but not yet paid, to be forfeited;

· require the repayment by the employee of all or part of any cash bonus received;

· determine that any unvested and/or unexercised LTIs will lapse;

· require the repayment of all or part of the cash amount received by the employee following vesting and subsequent sale of a LTI;

· reduce future discretionary remuneration to the extent considered necessary or appropriate to take account of the event that has triggered the clawback;

· initiate legal action against the employee; and/or

· take any other action the Board considers appropriate.

1.5 Remuneration Consultants

There were no remuneration recommendations made in relation to key management personnel by remuneration consultants in the financial year ended 30 June 2021.

1.6 Adoption of year ended 30 June 2020 Remuneration Report

At the Annual General Meeting held 16 December 2020 shareholders adopted the 30 June 2020 Remuneration Report with a clear majority of 486,660,940 votes in favour, being 99.70% of the votes cast.

REMUNERATION REPORT - AUDITED (CONTINUEd)

2. EMPLOYMENT CONTRACTS

The following table summarises the terms and conditions of contracts between key executives and the Company:

(1) The Company may terminate the contract immediately if serious misconduct has occurred. In this case the termination payment is only the fixed remuneration earned until the date of termination and any unvested options will immediately be forfeited.

(2) Appointed Chief Executive Officer and Director on 16 June 2021.

(3) Managing Director and Interim Chairman until 15 June 2021, appointed as Executive Chairman on 16 June 2021. Mr Salomon's contract has been extended past 30 June 2021 by mutual agreement between the Company and Mr Salomon on an ongoing basis as at the date of this report.

(4) Appointed Chief Financial Officer on 1 July 2021.

(5) Executive Director and Chief Financial Officer until 1 July 2021, Company Secretary until 25 August 2021, appointed as Non-Executive Director on 1 July 2021. Mr Bolton's contract has been extended by mutual agreement between the Company and Mr Bolton on an ongoing basis as at the date of this report.

3. DIRECTORS' AND EXECUTIVE OFFICERS' REMUNERATION

Details of the nature and amount of each major element of remuneration of each director of the Company and other key management personnel of the consolidated entity are:

The Directors and Executives of the Company may be Directors or Executives of the Company's subsidiaries. No remuneration is received for directorships of subsidiaries. All key management personnel other than Mr Judd and Mr Khare are employed by the parent entity.

Refer to the following explanatory notes for additional information.

3. DIRECTORS' AND EXECUTIVE OFFICERS' REMUNERATION (Continued)

Notes in Relation to Directors' and Executive Officers' Remuneration

(1) Benefits, including non-monetary include relocation costs and related expenses, as well as minor benefits, such as payments on behalf of employees considered personal, insurance premiums, car parking and any associated fringe benefits tax.

(2) Includes, where applicable, accrued employee leave entitlement movements.

(3) The 2021 share-based payment disclosures relate to the issue of remuneration shares (refer point 4 below). No unlisted options were issued to key management personnel or executives as remuneration during the year ended 30 June 2020 or 30 June 2021. In accordance with the ASX waiver granted 2 November 2020, the Company advises that the number of remuneration shares that were issued to directors in the year ended 30 June 2021 totalled 26,447,267 and the percentage of the Company's issued capital represented by these remuneration shares was 0.47%.

(4) Fees for Non-Executive Directors are not linked to the performance of the Group. At the Annual General Meeting (AGM) held on 27 November 2019 shareholders approved the issue of remuneration shares, whereby two Non-Executive Directors agreed to receive part of their directors' fees paid through the issue of shares in lieu of cash payments, for the period of 1 November 2019 through to 31 October 2020, in order to conserve the cash reserves of the Company. Similar shareholder approval was also received at the AGM held on 16 December 2020 for the period from 1 November 2020 through to 31 October 2021. Shareholder approval was separately obtained at the General Meeting held on 8 June 2021 for the remuneration shares issued for the period from 1 May 2019 through to 31 October 2020.

(5) Mr Bolton was appointed Chief Financial Officer and Company Secretary on 3 June 2016 and Executive Director on 26 March 2020, with an initial fixed annual remuneration of $273,750 inclusive of statutory superannuation, which was reduced to $260,063 effective 1 October 2016. The amounts paid during the years ended 30 June 2020 and 30 June 2021 reflects the reduced working hours implemented 1 October 2017 to facilitate a 20% reduction in salaries together with a further reduction in Mr Bolton's working hours to reduce costs which were implemented on 1 April 2020. Subsequent to year end, Mr Bolton resigned as Executive Director and Chief Financial Officer and was appointed as Non-Executive Director on 1 July 2021, with his annual remuneration negotiated to $55,381 plus statutory superannuation per annum effective from this date. Mr Bolton resigned as Company Secretary on 25 August 2021.

(6) Mr Haywood was appointed a Non-Executive Director on 29 May 2017. Mr Haywood is based in the United Kingdom and is paid £30,000 per annum. The amount disclosed is converted into Australian dollars at the applicable exchange rate at the date of payment. During the 2021 financial year Mr Haywood received 8,360,226 remuneration shares (refer point 3 above) at a value of $22,040 (which included remuneration shares at a value of $12,531 which was previously accrued at 30 June 2020). As at 30 June 2021 remuneration shares not yet issued to Mr Haywood had a value of $1,818. These shares shall be issued in the next financial year.

(7) Mr Schwarz was appointed a Non-Executive Director on 4 September 2019. Mr Schwarz is based in the United Kingdom and is paid £30,000 per annum. The amount disclosed is converted into Australian dollars at the applicable exchange rate at the date of payment. During the 2021 financial year Mr Schwarz received 18,087,041 remuneration shares (refer point 3 above) at a value of $46,079 (which included remuneration shares at a value of $22,377 which was previously accrued at 30 June 2020). As at 30 June 2021 remuneration shares not yet issued to Mr Schwarz had a value of $4,545. These remuneration shares will be issued in the next financial year.

(8) Mr Lingo was appointed a Non-Executive Director on 11 February 2016 and interim Chairman on 23 February 2017 at an annual salary of $70,956 inclusive of statutory superannuation. On 6 September 2019, the Company announced an expanded operational role for Mr Lingo to drive the Cooper Basin Strategy. A new agreement for Mr Lingo, effective from 1 August 2019, had an initial term of 6 months and provided for a monthly consultancy fee of $20,000 per month, plus superannuation; and is also inclusive of the Chairman's fees. The agreement was subsequently extended until 30 March 2020 with a further one-month extension to 30 April 2020. Mr Lingo resigned on 5 May 2020.

During 2020 Mr Lingo elected to receive no remuneration shares.

(9) Mr Wessel was appointed as Chief Executive Officer and Director on 16 June 2021 at a fixed annual remuneration of £150,000 per annum, plus 14% UK National Insurance.

(10) Mr Salomon was appointed Managing Director in March 2016 with an initial fixed annual remuneration of $350,000 per annum, inclusive of statutory superannuation, which was reduced to $271,950 inclusive of statutory superannuation effective from 1 October 2016, following the implementation of cost reductions by the Company. A reduction in Mr Solomon's working hours to further reduce costs was implemented on 1 April 2020. Mr Salomon was appointed as Interim Chairman on 5 May 2020 and continued as Managing Director and Interim Chairman until he was appointed as Executive Chairman on 16 June 2021. His annual remuneration was renegotiated to $170,100 effective from 1 September 2021.

3. DIRECTORS' AND EXECUTIVE OFFICERS' REMUNERATION (Continued)

Notes in Relation to Directors' and Executive Officers' Remuneration (Continued)

(11) Mr Judd was appointed as Chief Financial Officer on 1 July 2021 at fixed annual remuneration of £110,000 per annum, plus 14% UK National Insurance.

(12) Mr Khare became key management personnel on 8 November 2016 and is based in India. The amount paid during the years ended 30 June 2020 and 30 June 2021 reflects the reduced working hours implemented 1 October 2017 to facilitate a 20% reduction in salaries together with a further reduction in working hours which was implemented on 1 May 2020. Mr Khare's remuneration has been converted from Indian Rupees at the average exchange rate for the year.

Analysis of Bonuses included in Remuneration

There were no short-term incentive cash bonuses awarded as remuneration to key management personnel during the financial year.

4. Equity Instruments

All rights and options refer to rights and unlisted options over ordinary shares of the Company, which are exercisable on a one-for-one basis.

4.1 Rights and Options Over Equity Instruments Granted as Compensation

There were no rights or options over ordinary shares granted as compensation to key management personnel during the financial year (2020: nil).

4.2 Rights and Options Over Equity Instruments Granted as Compensation Granted Since Year End

No rights and options over ordinary shares in the Company were granted as compensation to key management personnel and executives since the end of the financial year.

4.3 Modification of Terms of Equity-Settled Share-based Payment Transactions

No terms of equity-settled share-based payment transactions (including options granted as compensation to key management personnel) have been altered or modified by the issuing entity during the financial year.

4.4 Exercise of Options Granted as Compensation

During the financial year no shares were issued on the exercise of options previously granted as compensation.

4.5 Details of Equity Incentives Affecting Current and Future Remuneration

There are no rights or options currently held by key management personnel, (2020: nil).

4.6 Analysis of Movements in Equity Instruments

There were no shares, rights or options over ordinary shares in the Company granted to or exercised by key management personnel in the current year.

4.7 Options or Rights over Equity Instruments Granted as Compensation

There are no rights or options held by key management personnel, or their related parties as at 1 July 2020 through to 30 June 2021.

5. KEY MANANGEMENT PERSONNEL TRANSACTIONS

5.1 Other Transactions with Key Management Personnel

There were no other transactions with entities associated with key management personnel in the year ended 30 June 2021 (2020: nil).

5.2 Movements in Shares

The movement during the financial year in the number of ordinary shares in the Company held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

END OF REMUNERATION REPORT - AUDITED

Signed in accordance with a resolution of the Directors.

West Perth

Western Australia

22 September 2021

AUDITOR'S INDEPENDENCE DECLARATION

TO THE DIRECTORS OF OILEX LTD

In relation to our audit of the financial report of Oilex Ltd for the year ended 30 June 2021, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

PKF Perth

Simon Fermanis

Partner

22 September 2021

West Perth,

Western Australia

Level 4, 35 Havelock Street, West Perth, WA 6005

PO Box 609, West Perth, WA 6872

T: +61 8 9426 8999 F: +61 8 9426 8900 www.pkfperth.com.au

PKF Perth is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.

Liability limited by a scheme approved under Professional Standards Legislation.

2021 FINANCIAL REPORT

CONTENTS

Consolidated Statement of Profit or Loss and Other Comprehensive Income.......................................................... 27

Consolidated Statement of Financial Position........................................................................................................... 28

Consolidated Statement of Changes in Equity.......................................................................................................... 29

Consolidated Statement of Cash Flows.................................................................................................................... 30

Notes to the Consolidated Financial Statements……………………………………................................................... 31

Directors' Declaration................................................................................................................................................ 72

Independent Auditor's Report................................................................................................................................... 73

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The above Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.

(1) Capital raising costs include cash payments and the fair value of options granted to the underwriter.

The above Consolidated Statement of Changes in Equity is to be read in conjunction with the accompanying notes.

The above Consolidated Statement of Cash Flows is to be read in conjunction with the accompanying notes.

NOTE 1 - REPORTING ENTITY

Oilex Ltd (the Company) is a for-profit entity domiciled in Australia. These consolidated financial statements comprise the Company and its subsidiaries (collectively the Group and individually Group Entities). Oilex Ltd is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange (ASX) and on the Alternative Investment Market (AIM) of the London Stock Exchange. The Group is primarily involved in the exploration, evaluation, development and production of hydrocarbons.

Parent Entity Information

In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 24.

NOTE 2 - BASIS OF PREPARATION

(a) Statement of Compliance

The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB).

The consolidated financial statements were authorised for issue by the Board of Directors on 22 September 2021.

(b) Basis of Measurement

The consolidated financial statements have been prepared on the historical cost basis except for share-based payment arrangements measured at fair value and the foreign currency translation reserve. 

A number of the Group's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for some measurement and/or disclosure purposes and where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(c) Going Concern Basis

The Directors believe it is appropriate to prepare the consolidated financial statements on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

The Group has incurred a loss of $614,345 (2020: $5,841,096), had cash outflows from operating activities of $1,394,040 (2020: $2,837,661), concluded the year with cash and cash equivalents of $4,310,767 (2020: $173,816) and had no loans outstanding at year-end (2020: loans outstanding of $769,555).

The Group will require further funding within the next twelve months in order to progress the Cambay development and drilling programme, to meet its ongoing administrative expenses, and for any new business opportunities that the Group may pursue.

The Directors believe that the Group will be able to secure sufficient funding to meet the requirements to continue as a going concern, due to its history of previous capital raisings, acknowledging that the structure and timing of any capital raising is dependent upon investor support, prevailing capital markets, shareholder participation, oil and gas prices and the outcome of planned exploration and evaluation activities, which creates uncertainty.

The Directors consider the going concern basis of preparation to be appropriate based on its forecast cash flows for the next twelve months and that the Group will be in a position to continue to meet its minimum administrative, evaluation and development expenditures and commitments for at least twelve months from the date of this report.

If further funds are not able to be raised or realised, then it may be necessary for the Group to sell or farmout its exploration and development assets and to reduce discretionary administrative expenditure.

NOTE 2 - BASIS OF PREPARATION (CONTINUED)

(d) Currency and Foreign Currency Transactions

These consolidated financial statements are presented in Australian dollars, which is the Company's functional currency. The functional currency of the Company's subsidiaries is United States dollars, Australian dollars or Pounds Sterling.

Transactions in foreign currencies are translated into the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the foreign exchange rate at the reporting date.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss.

(e) Basis of Consideration

These consolidated financial statements comprise the Company and its subsidiaries (collectively the Group and individually Group Entities).

i) Subsidiaries

Subsidiaries are entities controlled by the Group. The list of controlled entities is contained in note 23. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

ii) Joint Arrangements - Joint Operations

The interests of the Group in unincorporated joint operations and jointly controlled assets are recorded in note 25.

iii) Transactions Eliminated on Consolidation

Intragroup balances and transactions, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.

(f) Key Estimates, Judgements and Assumptions

In preparing these consolidated financial statements, management continually evaluate judgements, estimates and assumptions that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. All judgements, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances. Actual results may differ from these judgements, estimates and assumptions. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

A key assumption underlying the preparation of the financial statements is that the entity will continue as a going concern. An entity is a going concern when it is considered to be able to pay its debts as and when they fall due, and to continue in operation, without any intention or necessity to liquidate or otherwise wind up its operations.

Judgement has been required in assessing whether the entity is a going concern as set out in note 2(c).

In the process of applying the Group's accounting policies, management have made judgements, assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year as follows:

· Income tax - refer note 5

· Trade and other receivables - refer note 9

· Exploration and evaluation assets - refer note 12

· Development assets - refer note 13

· Property, plant and equipment - refer note 14

· Provisions - refer note 16

· Share-based payments - refer note 22

NOTE 2 - BASIS OF PREPARATION (CONTINUED)

(f) Key Estimates, Judgements and Assumptions (Continued)

COVID-19 pandemic

Judgement has been exercised in considering the impacts that the ongoing COVID-19 pandemic has had, or may have, on the consolidated entity based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the consolidated entity operates.

The impact of the COVID-19 pandemic up to 30 June 2021 has been financially negative for the consolidated entity. This is largely due to its general impact in India where significant delays were experienced with the sale process being conducted by GSPC for its 55% interest in the Cambay Production Sharing Contract (PSC). As a result, Indian operations have continued to be maintained on a 'care and maintenance' basis for a longer period than originally anticipated.

Other than this matter and those addressed in specific notes, there does not currently appear to be either any other significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the consolidated entity unfavourably as at the reporting date or subsequently as a result of the COVID-19 pandemic.

(g) Rounding of Amounts

The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest dollar, unless otherwise stated.

(h) Accounting Policies

Significant accounting policies that are relevant to the understanding of the consolidated financial statements have been provided throughout the notes to the financial statements. Accounting policies that are determined to be non-significant have not been included in the consolidated financial statements.

The accounting policies disclosed have been applied consistently to all periods presented in these consolidated financial statements and have been applied consistently by Group entities, except for any changes in accounting policies.

Changes in significant accounting policies

The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group.

Accounting Standards and Interpretations issued but not yet effective

A number of new or amended Accounting Standards and Interpretations are effective for annual periods beginning after 1 January 2021 and earlier application is permitted; however, the Group has not early adopted the new or amended Accounting Standards and Interpretations in preparing these consolidated financial statements. The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations, however, none of these new or amended Accounting Standards and Interpretations are expected to have a significant impact on the Group's consolidated financial statements.

This section focuses on the results and performance of the Group.

NOTE 3 - OPERATING SEGMENTS

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. The Group has identified its operating segments based upon the internal management reports that are reviewed and used by the executive management team in assessing performance and that are used to allocate the Group's resources. The operating segments identified by management are based on the geographical location of the business. Each segment has responsible officers that are accountable to the Chief Executive Officer (CEO) (the Group's chief operating decision maker). The operating results of all operating segments are regularly reviewed by the Group's CEO to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

The Group's executive management team evaluates the financial performance of the Group and its segments principally with reference to revenues, production costs, expenditure on exploration evaluation and development costs.

The Group undertakes the exploration, development and production of hydrocarbons and its revenue is from the sale of oil and gas. Information reported to the Group's CEO is on a geographical basis.

Financing requirements, finance income and expenses are managed at a Group level.

Corporate items include administration costs comprising personnel costs, head office occupancy costs and investor and registry costs. It may also include expenses incurred by non-operating segments, such as new ventures and those undergoing relinquishment. Assets and liabilities not allocated to operating segments and disclosed are corporate, and mostly comprise cash, plant and equipment, receivables as well as accruals for head office liabilities.

Major Customer

No revenues were recognised during the current and prior financial periods as oil and gas operations were maintained on a 'care and maintenance' basis.

Revenue

The Group recognises revenue as follows:

a) Revenue from Contracts with Customers

Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.

b) Interest

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

c) Other Revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

Expenses

Impairment - refer notes 12 and 13

Doubtful debts - refer note 9

Depreciation - refer note 14

Amortisation - refer note 13

Employee benefits - refer note 16

Leases - refer note 18

NOTE 3 - OPERATING SEGMENTS (CONTINUED)

Goods and Services Tax ('GST') and Other Similar Taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

NOTE 3 - OPERATING SEGMENTS (Continued)